Thursday, October 3, 2013

SimplePart September Update Part 2

Part 2 of the September update for SimplePart written by SimplePart CEO Cole Getzler.

Industry News

Google News

Google released a major update, affecting 90% of all searches, in late August. We identified this in last month’s newsletter as an “unnamed” update – Google has named it Hummingbird. A small number of our clients websites saw a small, short lived negative impact for a number of days, then went positive from then on. The rest of our clients sites all saw a small improvement in ranking from the very beginning. The idea behind Hummingbird is to better serve conversational searches, such as “what is the right oil filter for my Acura TSX?”. Where before Google’s algorithm would have found pages matching those words, now it tries to understand that you are looking for a store selling Acura parts – it tries to extract context for the search, and works best on longer queries (“long tail”, where we specialize).

This month, Google fully made the switch to Secure Search. Previously we had the ability to reach back into a user’s browser history and determine which keywords they used with Google, leading them to our clients websites. We used those keywords to improve customer experience on your website and show them more relevant products. Google had been slowly transitioning to Secure Search, and we have been watching the percentage of incoming visitors with keyword data decline steadily. With Google’s switch to Secure Search, we have lost the ability to do this – except for paid traffic. While paid traffic will continue to enjoy the benefits of keyword data availability, our clients other visitors may be less likely to purchase as a result.

Gmail experienced an outage on September 23rd which delayed email delivery by several hours, affecting its 29% of its 425 million users. Google says this was due to two concurrent network errors, which knocked out its redundancy – it took seven hours for their engineers to fully remedy the problem.

A survey published by Google this month shows that 62% of mobile searchers for auto parts/service click and call a business directly from Google’s search results. This suggests that by showing your phone number as an AdWords display ad extension, you can capture customers with high intent – and that without it, you risk losing those customers.

Google began rolling out a new logo, improved search app for Android and iOS (Apple), and toolbar on September 23rd. This toolbar helps customers navigate between different Google products. The search app allows context sensitive queries – if you ask about the Eiffel Tower, then later ask “how tall is it”, Google will know you’re talking about the Eiffel Tower. Mobile search results now sport a new design as well.

Auto parts e-commerce giant US Auto Parts has lost 90% of its shareholder value since its 2007 IPO. Maguire Asset Management, owner of 5.3% of outstanding shares, in a public letter is seeking to buy an additional 28% stake – considering it mismanaged, but undervalued. USAP has lost money each year since 2010, and for 2012 shows a net loss of nearly $36 million. Maguire hopes to turn USAP around. For Q1 and Q2 of 2012, USAP generated $133m in online sales for a net loss of $3m.

Below are some quick notes comparing USAP performance for Q1/Q2 2012 to all SimplePart dealers in aggregate, for the same period:

Bottom line – under the most favorable analysis possible for USAP, the average SimplePart dealer makes between $2 and $9 more in net profit per order than the biggest player in the online parts game. SimplePart dealers spend $2.84 per order in marketing expenses, while USAP spends $21.27 per order in marketing expenses; it is the need to drive traffic through paid channels that most hurts USAP’s profitability. It is SimplePart’s platform and services that focus on Search that is one of the biggest strengths we can offer our dealers – and it transfers straight to the bottom line.